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$376 mn SCI award for Korean shipbuilder

$376 mn SCI award for Korean shipbuilder
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First Published: Mon, Sep 15 2008. 10 35 PM IST

Preferred bid: An STX Shipbuilding Co. employee at Jinhae, South Korea. STX bid $94.10 million for each of the four capesize ships, beating its Chinese rival for the Shipping Corp. of India order. Seo
Preferred bid: An STX Shipbuilding Co. employee at Jinhae, South Korea. STX bid $94.10 million for each of the four capesize ships, beating its Chinese rival for the Shipping Corp. of India order. Seo
Updated: Mon, Sep 15 2008. 10 35 PM IST
Bangalore: South Korean STX Shipbuilding Co. Ltd beat a Chinese firm on price to win a $376.4 million (Rs1,728 crore) bid to build four new ships for Shipping Corp. of India Ltd (SCI), India’s largest shipping firm by fleet size and revenue.
STX quoted $94.10 million for each of the so-called cape-size ships. China’s New Times Shipbuilding Co. Ltd had quoted $96.5 million, said a person with knowledge of the bids, which were opened on 12 September.
Capesize cargo ships cannot ply the Suez or Panama canals, and must go around either the Cape of Good Hope or Cape Horn. They are the largest vessels capable of carrying dry bulk goods, typically as much as 175,000 tonnes.
A capesize ship currently rents out at $100,000 a day for a one-year contract.
Preferred bid: An STX Shipbuilding Co. employee at Jinhae, South Korea. STX bid $94.10 million for each of the four capesize ships, beating its Chinese rival for the Shipping Corp. of India order. Seokyong Lee / Bloomberg
“South Korean shipbuilders are now matching or even quoting lower prices than that offered by Chinese shipbuilders to win new orders,” the person said, “This has never happened before.” He did not want to be named because the deal has not yet been made public.
Mint could not immediately reach STX, while a spokesperson for state-owned SCI declined comment. South Korea is the world’s top shipbuilder by number of orders.
STX has lately become the preferred destination for Indian fleet owners, largely because of prices, building capacity and early delivery. The world’s fifth biggest shipbuilder by order size, STX is building 24 vessels valued at more than $1 billion, for Indian fleet owners such as SCI, Great Eastern Shipping Co. Ltd and Essar Shipping, Ports and Logistics Ltd, among others.
Ironically, most of these will be built at its yards in Dalian, China. The company is building a new yard in Vietnam, in addition to its existing facilities in South Korea. SCI has ordered 16 ships from STX. These include six petroleum tankers, six medium and four large dry bulk cargo carriers.
The Mumbai-based firm has ordered 32 new ships worth more than $1.88 billion at various global yards to replace some of its ageing fleet that have to be decommissioned in line with global maritime regulations.
For STX, this would be the second big order in recent months from SCI, which in August had placed orders for four new large bulk carriers for $238.2 million. SCI has started buying bigger dry bulk cargo ships because shippers prefer them to transport larger quantities of cargo in a single trip to economize on freight costs.
The Union government has recently granted navratna status to the firm, which gives full autonomy to a public sector undertaking such as SCI for capital expenditure without any ceiling. It allows SCI to make capital investment decisions and enter into joint ventures without approval from the shipping ministry.
The firm plans to buy another 40 new ships worth close to $2.6 billion in the next four years, said Umesh C. Grover, director of SCI’s technical and offshore services unit.
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First Published: Mon, Sep 15 2008. 10 35 PM IST